USDCAD rallied from opening level of 1.2306 to 1.2364 immediately after a better than expect US employment report. Nonfarm payrolls rose 200,000 (forecast 180,000) average hourly earnings jumped to 2.9% from 2.6% . The unemployment rate was unchanged. Today’s data underpins forecasts of four rate hikes in 2018. US Michigan Consumer Confidence (forecast 95.0) and Factory Orders (forecast 1.5%) are still to come today.
US dollar buyers were not evident in early Asia trading. The FX majors added to or consolidated Thursday’s US dollar losses in the early going.. NZDUSD dropped on weak Building Permits data and AUDUSD followed suit.
Rising US Treasury yields and concern about further gains if the US employment report was stronger than expected gave USDJPY a bid, which erased all of Thursday’s losses and climbed to 109.91 from 109.29.The Japanese Finance Minister said that easy monetary policy would be kept until inflation hits the 2% target.
EURUSD held on to yesterday’s gains and traded in a narrow 1.2476-1.2517 band. Traders still believe that the prospect of early ECB tightening trumps actual US Fed tightening.
Sterling drifted lower once Europe started trading thanks to weaker than expected UK Construction PMI (Actual 50.2 vs forecast 52.0)
Oil and gold prices are off their best levels as positions get adjusted ahead of this morning’s US economic releases. Non-farm payrolls are expected at 180,000, the unemployment rate at 4.0% and average hourly earnings to rise to 2.6%. If so, the US dollar may trade higher, in part due to profit taking ahead of the weekend. Michigan Consumer Confidence and Factory orders will exacerbate US dollar buying if they are higher than forecast.
USDCAD Technical Outlook
The intraday USDCAD technicals flipped to bullish with this mornings break above 1.2310. If resistance in the 1.2370-1.2410 area is overcome, it sets the stage for a test of resistance in the 1.2550 area A break below 1.2330 will argue for more 1.2250-1.2370 consolidation.
Today’s Range 1.2330-1.2405